Philippines stuck in lower-middle income group as World Bank raises threshold


At a glance

    The hurdle to climb to upper-middle income status under the World Bank's classification became even harder, such that the Philippines remained the only Association of Southeast Asian Nations (ASEAN) founding member languishing as lower-middle income.

    The latest data released by the Washington-based multilateral lender on Monday, July 1, showed the Philippines stuck as a lower-middle income country for fiscal year 2025, covering the period July 1, 2024 to June 30, 2025.

    The World Bank, using its Atlas method in computing the gross national income (GNI) per capita as basis of its country income classification, further hiked the upper-middle income threshold to GNI per capita of $4,516-14,005 in 2023, while also raising the lower-middle income category — where the Philippines belonged since at least 1989 — to $1,146-4,515.

    GNI refers to the total income generated by a country's residents inside and outside its borders. It is a broader measure of economic performance than gross domestic product (GDP), which covers only local output.

    The Philippines' GNI per capita hit a new record-high of $4,230 in 2023 from $3,950 in 2022, as the domestic economy, as well as foreign earnings, continued to recover from the country's worst post-war recession at the height of the Covid-19 lockdowns.

    Despite the Philippines' higher GNI per capita in 2023, it remained beneath the World Bank's updated GNI per capita range for upper-middle-income countries. During the preceding fiscal year 2024, upper-middle income economies had a GNI per capita of $4,466-13,845.

    In his inaugural State of the Nation Address (SONA) in 2022, President Ferdinand Marcos Jr. said the Philippines aspires to become an upper-middle income country by 2024. However, his economic team later conceded that this goal would be more attainable much later.

    Just last week, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said the country’s ambition to reach upper middle-income status could only be achieved in late 2025 or early 2026.

    During the Duterte administration, its economic team hoped to lift the Philippines to upper-middle income status in 2020 — a target hindered by the socioeconomic crises of the Covid-19 pandemic.

    Pre-pandemic, the Philippines' GNI per capita hit a high of $3,770 in 2019, before sliding to $3,350 in 2020 amid the fight against Covid-19, then inching up to $3,550 in 2021.

    Once the Philippines becomes an upper-middle income country, it will lose access to low interest rates slapped on official development assistance (ODA) or cheap loans extended by bilateral development partners like Japan, China, and South Korea, as well as multilateral lenders such as the World Bank, the Manila-based Asian Development Bank (ADB) and the China-led Asian Infrastructure Investment Bank (AIIB).

    To recall, the Philippines had climbed to become the World Bank's fifth-largest borrower in fiscal year 2023 — coinciding with President Marcos' first year in office, with a total of $ 2.336 billion worth across six approved loans.

    The Philippines was the only lower-middle-income country among the five founding members of the regional ASEAN grouping for the current 2025 fiscal year.

    In the previous fiscal year, Indonesia again ascended to the upper-middle income category with GNI per capita of $4,580 in 2022, and further up to $4,870 in 2023. Back in 2020, neighboring Indonesia moved up to upper-middle income status, but slid back to lower-middle income in 2021 as COVID-19 also took its toll on Southeast Asia's most populous country.

    Malaysia and Thailand had already been classified as upper-middle income countries, with GNI per capita of $11,970 and $7,180, respectively, in 2023.

    The island-state of Singapore has long been a high-income economy; its 2023 GNI per capita stood at $70,590.

    Meanwhile, fast-rising Vietnam's GNI per capita in 2023 reached $4,180, back to a lower level than the Philippines. In 2022, Vietnam hiked its GNI per capita to $4,010 from $3,590 in 2021, surpassing the Philippines for the first time.

    Among the other ASEAN members, oil-rich and thinly-populated Brunei's GNI per capita in 2023 was $34,970; Cambodia, $1,810; Laos, $2,120; and Myanmar, $1,210.

    Based on the latest World Bank data, the war-torn West Bank and Gaza fell back to lower-middle income economy status after rising to upper-middle income in the last fiscal year.

    Algeria and Iran returned to upper-middle income after four and three years, respectively, in the lower category; Mongolia also reverted to upper-middle income status, where it moved up in fiscal year 2016 before sliding back to lower-middle income for eight years.

    Warring Ukraine and Russia, despite the ongoing conflict, both improved their status to upper-middle income and high-income, respectively, in fiscal year 2025.

    Bulgaria also jumped to high-income status, while Palau moved back to the highest income category — countries with GNI per capita of $14,006 or more in 2023 — since a downgrade two years ago.